Date: Wed, 23 Jan 2008 22:13:33 -0800
From: Norm Matloff
To: Norm Matloff
Subject: Microsoft lets the cat out of the bag on the age issue
To: H-1B/L-1/offshoring e-newsletter
Enclosed is Vivek Wadhwa's latest column, on the difficulty that older
(i.e. 40+) programmers and engineers have in getting work in their
field. (I'll refer to this as age discrimination below, but as you'll
see, it's just as much a price issue as it is fear of the graybeards.)
As he says, it is a subject on which I feel strongly, as I have always
stressed the point that H-1B is really about AGE. The employers want to
hire the younger, i.e. cheaper, H-1Bs instead of the older, i.e. more
expensive, Americans.
For whatever reason--and I have no idea what it is--my point about age
often simply doesn't register. Just last Friday, for instance, at the
Sloan conference on H-1B, an official with the California state
employment office said to me, "I don't know why you're saying your
students aren't getting jobs. My daughter's fiance', a new graduate,
got a really nice job offer." I replied, "I made no statements about
new graduates in my talk. On the contrary, if you'll recall, what I
kept saying repeatedly was that the core of the H-1B issue is that the
visa is used as a tool for age discrimination, that young H-1Bs are
being hired in lieu of older Americans." Well, I can hardly blame that
state bureaucrat for not getting it, when a lot of the
programmer/engineer activists against H-1B don't understand the role of
age either.
I put Microsoft in the Subject line of this message, and I'll get to
that presently. But first, I want to address that well-worn excuse
given by the industry lobbyists, that the reason older programmers and
engineers can't get work is that their skills are out of date. Of
course, this is in fact true in some cases, but it is patently false in
general.
I go into the skills issue in great detail, a dozen pages or so, in my
University of Michigan article,
http://heather.cs.ucdavis.edu/MichJLawReform.pdf
showing that the skills issue is just a pretext for avoiding the older
workers.
But if you want a sound bite answer, try this: Just look at the
numerous instances in which firms, some of them well-known ones like the
Bank of America, have admitted that they laid off Americans and replaced
them with H-1Bs or L-1s--and then forced the Americans to TRAIN their
foreign replacements. It should be clear to anyone that it was the
H-1Bs/L-1s who lacked the skill sets, not the Americans.
Here is a better answer, not a sound bite but one that sheds much more
light: Even if the 40-year-old programmer does have the latest skills,
he is too expensive, period. Here's an example from another article of
mine, linked to by Vivek's piece below, referring the mother of all
"shortage studies," the 1997 ITAA report:
# "In fact, the industry's claim that the older workers' problems were
# due to skills deficits can be seen to be disingenuous in other
# ways. Consider a report by the Information Technology Association
# of America, one of the leading organizations lobbying for H-1B
# increases. The report complained that, while older programmers
# and engineers could be retrained, this made them flight risks:
#
# 'You take a $45,000 asset, spend some time and money training him,
# and suddenly he's turned into an $80,000 asset,' says Mary Kay
# Cosmetics CIO Trey Bradley...[the problem being that the retrained
# workers] become highly marketable individuals . . . attractive to
# other employers."
#
# It is clear that Bradley was not willing to pay the salaries paid
# by other firms. The real issue was money, not skills.
Jim Bennett, the person in Vivek's article, got another job after
retraining, but he's the exception, and by the way, note that the job he
got in the end was basically in sales and marketing, not in engineering.
Good for Jim Bennett, but Pete Bennett in the Bay Area could not even
get that.
Jim Bennett works for Microsoft (and may well have been suggested by
them as an example for the article, as their poster boy for the industry
claim that the older people would get jobs if only they kept their
skills up to date). That brings me to the title of my posting here,
"Microsoft lets the cat out of the bag on the age issue."
Here is the key passage:
Microsoft (MSFT) is known for the high quality of its hires.
Senior Vice-President and Chief Technical Officer David
Vaskevitch...acknowledges that the vast majority of Microsoft hires are
young, but that is because older workers tend to go into more senior
jobs and there are fewer of those positions to begin with.
Vaskevitch didn't know it, but he has now revealed the dirty little
secret--careers in software development are short. "THERE ARE FEWER OF
THOSE POSITIONS TO BEGIN WITH." That's it in a nutshell, folks! The
industry just doesn't have many jobs for the 40-year-olds. The industry
has devolved into a situation in which the industry PLANS to squeeze the
older software developers out of the business, by having a very narrow
jobs funnel at the Senior Software Engineer level.
And what ENABLES the employers to do this? The answer: H-1B. This is
what underlies all the shortage shouting. The employers want to have a
large supply of young workers, who are 40% cheaper on average. (That
figure is for young Americans; young H-1Bs are even cheaper still.) BCIS
data show that the computer-related H-1Bs in general have a median age
of 27.4.
And for those of you who might say, "Well, isn't this true in general,
that there aren't many jobs for people after age 40 in most
professions?", just look at my civil engineering example that Vivek
cites. The fact is that in the old days software developers had longer
careers too. But then India decided that its niche would be software,
exporting programmers to the U.S., and the rest is history. If India
had decided to go for the civil engineering labor market, then we'd see
the impact there too.
Norm
http://www.businessweek.com/technology/content/jan2008/tc20080115_576235.htm
Viewpoint January 15, 2008, 8:00PM EST
High-Tech Hiring: Youth Matters
In IT engineering, young hires tend to be more energetic and up to date. Older
workers need to keep skills fresh, or aim for management posts
by Vivek Wadhwa
In the engineering globalization debate, the battle lines are drawn.
Companies like Microsoft (MSFT), Intel (INTC), and Oracle (ORCL) say
there are severe shortages of skilled workers and they need more visas
to bring in foreign workers to stay competitive. Unemployed engineers
say this push for more visas is a plot to suppress wages. My own
research at Duke University has shown that there is no general shortage
of engineers in the U.S.
The globalization debate shouldn't focus on the issue of visas. Instead,
it should examine an issue that tech executives don't like to discuss:
age. Tech companies prefer to hire young engineers. Engineering has
become an "up or out" profession—you either move up the ladder or you
face unemployment. In other words, even though globalization has
compounded the difficulties for aging engineers, it's not the culprit.
Documenting Age Discrimination
One of the staunchest opponents of foreign worker visas is Norm
Matloff, a professor at the University of California, Davis, who says
careers in the programming profession are notoriously short-lived. His
research (flip to page 5 of the linked PDF) into attrition rates
revealed that five years after finishing college, only 57% of computer
science graduates were working as programmers; at 15 years the figure
dropped to 34%, and at 20 years—when most were still only age 42—it was
down to 19%. This was in sharp contrast to civil engineering, where
careers lasted much longer. Matloff says age discrimination is rampant
in the tech industry and the importation of foreign workers into the
U.S. facilitates this.
I know from my days as a tech chief executive that finding good
engineering talent in the U.S. is always difficult. And hiring policies
and skill needs vary significantly between companies. Some can only
afford to hire young, inexperienced workers, while others can pick and
choose. But age is still the issue.
Startup firms are often the most cost-constrained. Consider former
tech entrepreneur Jason Williamson, who is now a product manager at
Oracle (ORCL). He says that during the six years he spent running
BuildLinks, a software company focused on the construction industry,
his strategy was to find young, impressionable workers who earned
entry-level salaries and could learn on the job. He had limited capital
and needed employees who could afford to work through the tough times
when his company couldn't make payroll.
Even the well-funded, venture-backed companies usually echo the
experiences of JiNan Glasgow, chief executive officer of patent software
firm Neopatents in Raleigh, N.C. She says she can afford to pay what she
needs, but her best hires and most productive employees have been new
college graduates. She explains they tend to be more familiar with the
latest technologies, adapt readily to change, are more creative, and try
new things. Middle-aged hires have not always worked out as well for
her. She says most had dated skills and expected to be paid for
experience that wasn't relevant to her firm.
Limited Senior Management Berths
The fact is that in tech, youth is an asset and is in great demand.
Experienced engineers are needed mostly in senior architect positions
and in management, where they are paid the highest salaries.
Microsoft (MSFT) is known for the high quality of its hires.
Senior Vice-President and Chief Technical Officer David Vaskevitch says
younger workers have more energy and are sometimes more creative. But he
adds there is a lot they don't know and can't know until they gain
experience. So he says his company recruits aggressively for fresh
talent on university campuses and for highly experienced engineers from
within the industry. One is not at the expense of the other, he insists.
For him, it is all about hiring the best and brightest—age and
nationality are not important. He acknowledges that the vast majority
of Microsoft hires are young, but that is because older workers tend to
go into more senior jobs and there are fewer of those positions to begin
with.
There is lots of competition for these senior jobs. And globalization is
making things worse. Companies are increasingly locating their research
and development operations closer to growth markets (BusinessWeek.com,
1/18/07). Companies like IBM (IBM) are adding tens of thousands to
their workforce in places like Bangalore and Shanghai. Some of these
jobs would otherwise go to older and more expensive workers in the U.S.
How Maturing Engineers Can Cope
So the days of lifelong employment for engineers may be long gone. And
they face decreasing salaries as they reach their fifties. Research by
University of California, Berkeley, professors Clair Brown and Greg
Linden shows that even those with masters degrees and PhDs have reason
to worry. Their analysis of Bureau of Labor Statistics and Census data
for the semiconductor industry revealed that salaries increased
dramatically for engineers in their 30s but these increases slowed after
the age of 40. After 50, the mean salary dropped by 17% for those with
bachelors degrees and 14% for those with masters degrees and PhDs. They
found that salary increases for holders of post-graduate degrees were
always lower than for those with bachelor's degrees.
The harsh reality is that as engineers progress in their careers, they
need to stay current in new technologies and become project managers,
designers, or architects. To keep their jobs, engineers need to build
skills that are more valuable to companies and take positions that can't
be filled by entry-level workers. Experienced engineers can also find
rewards in entrepreneurship, teaching, and sales, as well as use
their skills to excel in unrelated professions. And as Microsoft's
Vaskevitch says, there are computer programmers "who become like rock
stars and are unbelievably valuable (and well compensated) as they get
older."
Joe Bennett, 44, provides a great example of the approach engineers
should take. After working as an engineer for 13 years at Microsoft
and becoming senior director of its developer and platform division, he
realized that he was losing touch with the technologies he was
marketing. So he took a three-month sabbatical to brush up on
programming languages and frameworks like C# and ASP.NET, and
transferred into a job where he was touting the benefits of different
Microsoft technologies. He says that he isn't leading people, but is
having fun again and is more intellectually engaged in his work than he
has been in 10 years. He believes he is now more valuable to the
company.
The bottom line is that we can't slow globalization or require companies
to do things that aren't in their economic interests. Let's focus the
debate on improving the skills of our existing workforce.
Wadhwa is Wertheim Fellow at the Harvard Law School and executive in
residence at Duke University. He is a tech entrepreneur who founded two
technology companies. His research can be found at
www.globalizationresearch.com .